News

Gap reports a rare decline in online sales in Q1

May 22, 2015 12:59 PM

Gap Inc., which has been posting double-digit percentage increases in web sales for the past half-decade, reported a rare year-over-year dip in online sales.

Online sales declined 2.1% in the quarter ended May 2 to $563 million from $575 million in the same quarter a year ago, the company said Thursday. Executives blamed the fall-off in web revenue on the same factors that dragged down company sales 3% year over year: the closing of the Piperlime brand, the West Coast dock strike giving the apparel retailer less merchandise to sell and overall weakness in the Gap brand.

“We are not happy with the number at all,” Sabrina Simmons, executive vice president and chief financial officer, said of the e-commerce decline, during a conference call Thursday with investment analysts. “But we would expect it to improve.” Once the port backlog is cleared, she said, Gap expects to “get that to a more normalized level,” Simmons added, according to a transcript from Seeking Alpha.

Gap, No. 18 in the Internet Retailer 2015 Top 500 Guide, has reported year-over-year growth in online sales of nearly 18% for the past five years, according to the Top 500 Guide.

Company executives emphasized they are working to revitalize the Gap brand, which represents 38% of Gap Inc.’s physical stores. Same-store sales at Gap stores were down 10% worldwide and Banana Republic off 8%. The bright spot was Old Navy, which was up 3%.

For the first quarter of its fiscal year 2015 ended May 2, Gap reported:

Total sales declined 3% to $3.66 billion from $3.77 billion.

Net income fell 8.1% to $239 million from $260 million.

The web accounted for 15.4% of company sales in the quarter, compared with 15.3% in the prior-year quarter.